China's GDP is "man-made," unreliable: top leader

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BEIJING (Reuters) - China’s GDP figures are “man-made” and therefore unreliable, the man who is expected to be the country’s next head of government said in 2007, according to U.S. diplomatic cables released by WikiLeaks.

China's Vice-Premier Li Keqiang attends a session at the World Economic Forum (WEF) in Davos January 28, 2010. REUTERS/Christian Hartmann

Li Keqiang, head of the Communist Party in northeastern Liaoning province at the time, was unusually candid in his assessment of local economic data at a dinner with then-U.S. Ambassador to China Clark Randt, according to a confidential memo sent after the meeting and published on the WikiLeaks website.

The U.S. cable reported that Li, who is now a vice premier, focused on just three data points to evaluate Liaoning’s economy: electricity consumption, rail cargo volume and bank lending.

“By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are ‘for reference only,’ he said smiling,” the cable added.

Li is widely expected to succeed Wen Jiabao as premier in early 2013, a position that will put him in charge of policy making in the world’s second-biggest economy.

A news official in the Chinese foreign ministry declined to comment on the specific cable and referred to comments last week in which a ministry spokesman called on the United States to resolve issues related to the leaks.

A spokesman for the U.S. Embassy to China was not immediately available.

Chinese economic numbers, especially at the provincial level and lower, have long been viewed with suspicion by analysts.

“That China’s GDP is not reliable, especially for local GDP, that is nothing new,” said an economist with a foreign bank who requested anonymity because of the sensitivity of discussing top national leaders.

“Some of the volume data, such as power and rail freight and even (bank) credit, are interesting because there is less incentive to massage them at the local level. But they reveal only part of the truth, not the entire truth,” he said.

“This would be a useful measure for steel and cement production. I’m not sure how well it would measure retail sales.”

Li would naturally have been most interested in heavy industry in his stewardship of Liaoning’s economy. The province is one of China’s top producers of steel, petrochemicals and machinery.

STATS Skeptic

Li has also gone on the record before to ask for more from the government’s statisticians.

During a 2009 visit to the National Bureau of Statistics, Li asked whether China calculated GDP on a monthly basis.

Li pressed on when he was told that data was gathered quarterly and that monthly calculations were difficult.

“Do Western nations make monthly calculations?” he asked, according the NBS website.

The U.S. embassy memo, sent on March 15, 2007, described Li as engaging and well informed. It said that he was trying to create a “harmonious society” by providing new housing to the poor and creating jobs for every household.

Li noted public dissatisfaction with education, health care and housing but said that official corruption was the biggest source of anger, the cable said.

He was reported as saying that the most effective way to combat corruption was to create transparent rules and to ensure adequate supervision, while also educating officials.

“Part of this education involves prison tours that force bureaucrats to visit incarcerated officials convicted of graft in order to witness first-hand the consequences of malfeasance,” the cable said.